Can Blockchain Boost The Video Game Industry Growth In 2018?

Most platform participants complain about the lack of timely payments and transparent policies, together with unfair cuts of revenues. Blockchain is here to help.

The global video game industry has amassed tens of billions in sales, and has established itself as a self-sufficient economy sector. According to a market report from intelligence firm Newzoo, it will deliver up to $100 billion in revenues this year and reach $130 billion by 2021, as predicted by Juniper Research.

In turn, Indian market now stands at $290 million, according to a report by KPMG. However, with emerging technologies such as blockchain and around 190 million gamers set to join by 2021, it is seen as a $1 billion opportunity for India.

The market’s growth is being driven by a continuing rise of mobile and social. Based on both, Free-to-Play game titles and MMOs have improved developer revenues, and attracted interest from smaller studios and independent producers in contrast with declining premium PC and Pay-to-Play model.

Today, we would like to explore related areas of potential interest for developers and gamers: from blockchain-based distribution platforms to reinvented in-game assets management and smart reward programs.

Blockchain-Based Distribution Platforms

In fact, the online distribution market is dominated by a handful of platforms. The most popular ones are Steam, Origin, Uplay and GOG.com. They are controlled by Valve, Electronic Arts, Ubisoft and CD Projekt respectively.

These companies and platforms wield disproportionate bargaining power. Their centralized nature makes it harder for third-party studios and independent developers to meet certain standards, discuss urgent matters, solve disputes, promote their games, get featured and, eventually, cash out in a timely manner.

By design, digital platforms are intended to reduce distribution costs and facilitate microtransactions between gamers, developers, publishers and fans. However, most platform participants complain about the lack of timely payments and transparent policies, together with unfair cuts of revenues.

Here, the solution comes from cryptocurrencies, an innovative payment method that have already found its way into the gaming industry — as Valve, Zynga and others have been experimenting with Bitcoin and Ethereum. The blockchain technology that lies behind it is now being adopted by game companies and independent digital distribution platforms such as The Abyss (www.theabyss.com).

Blockchain extends well beyond means of payment and allows for tamper-proof recording of transactional data and anything of value on a decentralized and distributed basis. To put it simple, a distribution platform can now make in-game achievements and inventory ownership verifiable by all participants.

Moreover, blockchain-based systems have potential to reduce transactional costs by replacing fiat currencies as a payment option and enabling transparent peer-to-peer purchases. With the middleman taken out of the equation, this will allow for fair, timely and direct distribution of royalties and dividends.

In addition, it will put challenges of gamers and developers into proper perspective, ease the policy making issues and influence trust building.

Blockchain-Powered Interoperability

In this particular domain of Free-to-Play games and MMOs, blockchain-powered platforms allow for proof-of-ownership, secure trading and exchange of game-related content, in-game collectibles and inventory outside of the game server. Blockchain technology solves the problem of intermediation and provides a mechanism for developers and gamers to actually own their digital items, together with multiple ways to cash out even after leaving the platform.

One of such ways is to utilize platform-specific tokens issued by the distribution platform as means of payment. With continuous liquidity mechanisms built in, developers and gamers can sell their digital assets for tokens and convert them into fiat or cryptocurrency at any time.

Here, cross-platform interoperability with transparent transfer of ownership and secure digital trade is getaway to fair and stable income made off of hours and days put into earning in-game collectibles and inventory.

Smart Reward And Referral Programs

In fact, time spent within a game can be monetized with the help of blockchain. A blockchain-based distribution platform can provide a mechanism to earn, track, verify and actually own in-game rewards that can be converted into platform-specific tokens. Thus, such platforms as The Abyss can offer a range of multilevel motivational systems with bonuses for in-game activities.

In fact, developers can feed the behavioral data into smart contracts that would handle various in-game events and trigger corresponding rewards. Apart from it, they can reward referrals, motivate gamers to make even more money around their hobby by encouraging UGC, gameplay videos, guides, articles and social medial activity that helps to sustain buzz around the game. In addition, platform-specific tokens can be used to fund independent developers and help them market their products on blockchain-based digital distribution platforms.

Guest Author : Konstantin Boyko-Romanovsky is the founder of Destiny.Games video game company, and of The Abyss project, a new kind of game industry ecosystem where both developers and gamers can earn money. He has more than 17 years of experience in the game industry. Konstantin is a successful blockchain investor, cryptocurrency expert, and technology entrepreneur.